44560750

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
VAT/GST RELIEF FOR

FOREIGN BUSINESSES:
THE STATE OF PLAY
A Business and Government Survey
February 2010
Prepared by the Committee on Fiscal Affairs
CENTRE FOR TAX POLICY AND ADMINISTRATION

VAT/GST Relief for Foreign Businesses: The State of Play
Table of Contents
Executive Summary 4
I. Introduction 6
1. The OECD Work on VAT/GST Guidelines 6
2. Relieving VAT for Foreign Businesses 7
II. Assessing the Nature and Extent of the Issues 8

1. Methodology 8
2. Questionnaires on Governments’ Administrative Practices 9
3. Questionnaires on Business Experience 9
4. Data from Other Sources 9
III. Relief Procedures 11

1. Overview 11
2. Relief Procedure in New Zealand 11
3. Relief Procedure in Canada 12
4. Relief Procedure in Morocco 12
5. Relief Procedure in the European Union 12
6. Conclusion 13
IV. Results from the Government Survey 14

1. Time Limits to Submit Refunds 14
2. Restrictions to Refunds 14
3. Formalities 14
4. Reciprocity 15
5. Exposure to Refunds 16
6. Fraud and Avoidance Issues 17
©OECD 2010 Page 2 of 44

V. Results from the Business Survey 19

1. Highlights 19
2. Outline of the Summary Analysis 21
3. Section 1: Tell Us about You and Your Business 22
3.1. Size and Quality of Panel/Sample 22
3.2. Size/Type of Business 22
3.3. Location of Respondents 22
3.4. Industry of Respondents 24
4. Section 2: Tell Us about Your Business Experience with Foreign VAT 26
4.1. Business Experience with Foreign Business Expenditure 26
4.2. Countries where Business Expenditure Has Been Incurred 26
4.3. Is VAT Incurred on the Foreign Business Expenditure? 28
4.4. Who Recovers VAT in Foreign Countries? 28
4.5. What Is the Magnitude of the Foreign VAT Incurred? 30
4.6. Where Is Foreign VAT Incurred? 32
4.7. Profile of Foreign VAT Claims 33
5. Section 3: What is Your Business Experience with Foreign VAT Reclaims? 35
5.1. Assessment of Refund Procedures by Businesses 35
5.2. Management of Refund Claims by Businesses 37
5.3. Are There Countries where Your Business Has Stopped Claiming 39
Foreign VAT?
5.4. Efficiency and Cost of Refund Claims 39
5.5. Impact of Refund Procedures on Business Decisions 42
6. Suggestions for the Future 43

Executive Summary
In 2006, the OECD launched a new project aimed at providing guidance for governments on applying
Value Added Taxes (VAT) 1 to international trade. As part of this work on developing International
VAT/GST Guidelines, the OECD Committee on Fiscal Affairs (CFA) in cooperation with businesses
undertook work to ensure that taxation occurs in the jurisdiction of consumption and foreign
businesses (i.e. businesses that are neither established nor registered in a jurisdiction) do not unduly
support VAT in that jurisdiction.
Indeed, beyond the application of the so-called “Destination Principle” (according to which exports
are relieved from VAT and imports are taxed under the same rate and on the same basis as domestic
sales), most businesses involved with international trade incur VAT in jurisdictions where they are
unable to exert their right to deduct input tax through standard domestic VAT rules. A lack of rules
or procedures allowing those businesses to be relieved from or to recover the VAT incurred could
contradict one of the principles agreed by OECD countries in 2006 i.e. that “the burden of value
added taxes themselves should not lie on taxable businesses except where explicitly provided for in
legislation”.
In order to assess the nature and extent of the difficulties involved with this situation, the CFA’s
Working Party on Consumption Taxes agreed in 2007 that information should be collected on the
magnitude and nature of the main issues with which businesses and tax administrations are
confronted, with a view to assessing whether these issues are significant enough to require
remedies. At the same time, information in respect of best practices would also be collected.
Surveys were undertaken in 2007 and separate questionnaires were sent to tax administrations and
businesses. The surveys focused on how the procedures actually work in practice rather than on
how they have been set by law. The aim of this exercise was not to make an exhaustive list of
difficulties country by country but, rather, to assess the difficulties with which businesses and tax
administrations are confronted more generally.
The outcome of the survey on administrative practices with governments shows that, at least in
OECD countries, procedures exist almost everywhere to fully or partially relieve foreign businesses of
the local VAT burden. However, these procedures include a multitude of individual procedures
according to local legislation and practices. These procedures are generally divided into two groups
of countries: those where a wide range of zero-rating provisions exist for supplies to foreign
businesses (these countries tend to supplement their rules with the ability to register for VAT – with
or without restrictions – and with other business simplifications) and those where local VAT is
charged on certain supplies to foreign businesses and where a form of direct refund procedure is
available. Formalities to recover this input VAT vary widely across countries, which may create
difficulties, in particular for businesses incurring VAT in multiple jurisdictions. In addition, a number
of countries require some kind of reciprocity with the claimant’s home country in order to allow for
refunds to be made. This is mainly based on the requirement that these countries provide similar
1
Some jurisdictions adopt a “Goods and Services Tax” (GST) which is a form of value added tax. For ease of reading all value added taxes
will be referred as “VAT”.

advantages to their businesses when they incur consumption taxes there. However, there appears to
be a lack of consistency in the application of reciprocity by different countries.
The outcome of the business survey shows that 308 businesses responded to the questionnaire,
which confirmed the interest created by the issue and provided a sample large enough to draw valid
conclusions. The survey revealed that 80.2% of businesses incur expenditure in foreign countries
and almost all of them (i.e. 95.5%) do so in more than one country. Of those, 94.7% incur VAT on
such foreign expenditure. A significant proportion of businesses (nearly 21%) are unable to recover
any of such foreign VAT, citing a range of reasons, many of which are a direct result of tax
authorities’ policies or procedures.
Businesses incur significant amounts of VAT on foreign business expenditure: over 80% incur more
than USD 10 000 per annum and over 25% incur more than USD 1 million per annum.
Not all foreign VAT claims fall into the common category “travel expenditure & conferences/trade
shows”. Whilst almost all businesses would incur foreign VAT on such expenditure, a significant
number incur foreign VAT on goods (inc. tooling, stock, etc.) and general services (inc. professional
and back office services).
Almost 72% of businesses expressed a degree of difficulty with procedures for refunds. Key
difficulties seem to be communication with the authorities, including guidance, forms and
procedures and speed of repayment. This is echoed by the fact that at least 56.4% of businesses
outsource the function of managing foreign VAT claims, citing local language as well as cost
efficiency as the main factors for doing so.
About half of respondent businesses recover 50% or less of the foreign VAT they incur and a quarter
recover less than 25%. In terms of doing business in a particular jurisdiction, over one-third of
businesses are influenced by the potential to incur foreign VAT and nearly 40% have implemented
legitimate alternatives to avoid paying it or going through refund procedures.
It appears from the replies to the questionnaire that businesses would mainly like to see improved
communication with tax administrations, including in terms of administrative guidance (clarity of the
rules), interaction with individual businesses (taxpayer service) and actual means of communication
(use of modern communication technologies). The replies also indicate that harmonisation and
standardisation of the rules and procedures and quicker repayments from tax authorities would be
considered by businesses as significant improvements to refund procedures. The CFA will continue
to work on these issues with a view to helping countries improve their VAT relief methods and
procedures whilst at the same time providing safeguards against fraud.

I. Introduction
1. The OECD work on VAT/GST Guidelines
1. Recent work, led by the OECD’s Committee on Fiscal Affairs (CFA) in cooperation with
businesses, has revealed that the current international consumption taxes environment,
especially with respect to trade in services and intangibles, is creating obstacles to business
activity, hindering economic growth and distorting competition. Complex, unclear or
inconsistent rules across jurisdictions are difficult to manage for revenue bodies and create
uncertainties and high compliance costs for businesses.
2. To address these issues, the CFA has been working since 2006 on the development of the
OECD International VAT/GST Guidelines (www.oecd.org/ctp/vatguidelines) (Guidelines).
These will include a broad range of issues in the VAT area including taxation of international
trade and refund mechanisms. Details on the progress of this work can be found on the
OECD website http://www.oecd.org/ctp/ct.
3. Pending completion of the Guidelines, OECD countries have agreed in 2006 on two
fundamental principles:
• For consumption tax purposes internationally traded services and intangibles should be
taxed according to the rules of the jurisdiction of consumption;
• The burden of value added taxes themselves should not lie on taxable businesses except
where explicitly provided for in legislation.
4. In this context, the CFA clarified the following: “[the] words “except where explicitly
provided” mean that countries may legitimately place a value added tax burden on business.
Indeed, this is frequently the case as the following examples illustrate:
• Where transactions made by the taxpayer are exempt because the tax base of the
outputs is difficult to assess (i.e., many financial services) or for policy reasons (health
care, education, culture).
• Tax legislation may also impose value added tax on businesses to secure effective
taxation of final consumption. This will be the case when the taxpayer makes
transactions that fall outside the scope of the tax (e.g., transactions without
consideration) or the input tax relates to purchases that are not wholly used for
furtherance of taxable business activity.
• Countries also provide legislation that disallows input tax recovery where explicit
administrative obligations are not met (e.g., insufficient evidence to support input tax
deduction).

For the purposes of these principles, however, any such imposition of value added tax on
business should be clear and explicit within the legislative framework of the tax.” 2
5. The Guidelines are being developed by OECD governments, drawing on input from
businesses and from non-OECD economies. In its work, the CFA’s Working Party n° 9 on
Consumption Taxes (Working Party) is assisted by a Technical Advisory Group (TAG) made up
of academics and government and business3 representatives.
2. Relieving VAT for Foreign Businesses
6. The second principle (the burden of value added taxes themselves should not lie on taxable
businesses except where explicitly provided for in legislation) is normally applied to
international trade through the destination principle according to which exports are relieved
from VAT and imports are taxed under the same rate and on the same basis as domestic
sales. However, there are inevitably a number of cases where the standard rules will not
apply and where foreign businesses will incur VAT in a jurisdiction where they are neither
established nor registered. A number of jurisdictions allow foreign businesses to recover
that input VAT incurred in these jurisdictions. However, this right is applied in varied ways
across jurisdictions and recovery procedures, where they exist, can be complex and impose
significant compliance burdens. As part of the development of the Guidelines in this area,
the Working Party agreed in 2007 that information should be collected on the magnitude
and nature of the main issues with which businesses and tax administrations are confronted,
with a view to assessing whether these issues are significant enough to require remedies.
7. This data gathering work is finished and its results are outlined in this document, which has
been approved by the CFA in January 2010. This document comprises another four parts:
• A description of the framework and methodology applied to the surveys, as well as a

summary of other information that has been considered (Chapter II);
• A review of existing relief procedures (Chapter III);
• The result of the survey with governments on administrative practices (Chapter IV); and
• The result of the survey with businesses on their practical experiences (Chapter V).
2
CTPA/CFA (2006) 8.
3
Business experts participate to the International OECD VAT/GST Guidelines project through the Business and Industry Advisory
Committee to the OECD (BIAC).

II. Assessing the Nature and Extent of the Issues
1. Methodology
8. The data-gathering work was undertaken by means of questionnaires sent to government

delegates to the Working Party (between June 2007 and November 2008) and
questionnaires aimed at businesses placed on the OECD Website (in July 2008 and in June
2009). The surveys focused on how the procedures actually work in practice rather than
being limited to how they have been set by law. The aim of this exercise was not to make an
exhaustive list of difficulties country by country but, rather, to assess the difficulties with
which businesses and tax administrations are confronted. At the same time, information in
respect of best practices would also be collected.
9. This work was limited to:
• “Foreign” businesses, i.e. how businesses that are neither established nor registered/
required to be registered in a jurisdiction as a result of their day-to-day activities can
recover VAT incurred (or avoid VAT being charged) in that jurisdiction in respect of the
purchase of goods, services, intangibles or other things used for business purposes;
• VAT-type taxes. It does not deal with other consumption taxes such as retail sales taxes
and excise duties;
• International issues; and
• Business-to-Business transactions. VAT refund or relief procedures for tourists and

personal export schemes are not covered by this work.
Customs and VAT procedures for the export of goods were also left outside the scope of this
work.
10. The review work was not limited in geographical terms although the data-gathering exercise
in respect of the government administrative practices was mainly focused on OECD
countries.
11. Finally, some difficulties may also arise in situations where the right to deduct input tax is
limited for certain businesses e.g. when all or part of their outputs are VAT exempt4. The
question arises as to whether and to what extent the VAT incurred in a foreign country
should be refunded, since the scope for exemptions may vary from one country to another
and distortions of competition may occur for that reason. This issue is left outside the scope
of this work.
4
In this context, exemption means that no VAT is chargeable by the supplier and the supplier is unable to recover any input tax incurred in
the process of making such supplies. In some jurisdictions, exemption is referred to as “input taxation”.

2. Questionnaires on Governments’ Administrative Practices
12. Work started with an analysis of the circumstances in which businesses incurred foreign VAT
and an assessment of the current refund/recovery mechanisms. A questionnaire on
administrative practices was subsequently sent to tax administrations of OECD countries and
selected non-OECD economies5 to compile a summary of the legislation and administrative
practices in place.
13. This questionnaire was followed by additional questions to governments in May and
November 2008. The summary of the findings of this survey is outlined in Chapter IV of this
publication.
3. Questionnaires on Business Experience
14. A questionnaire on business experience was published on the OECD website in July 2008.
From the responses obtained, it appeared that many businesses found it difficult to quantify
the foreign VAT incurred and not refunded. However, the vast majority of responses clearly
indicated difficulties with the current procedures for obtaining foreign VAT refunds.
15. Drawing from this experience, a second questionnaire was published on the OECD website in
June 2009. This new questionnaire, an electronic version using interactive technology,
included both quantitative (e.g. amounts involved) and qualitative (e.g. “how easy/difficult is
it to claim foreign VAT?”) questions to measure businesses perceptions and opinions, as well
as descriptive questions (e.g. “what best describes the foreign VAT that you incur?”) to
assess exposure to business and their attitude to foreign VAT. The questionnaire was
distributed widely and 308 responses were received. The detailed outcome of this survey is
outlined in Chapter V of this publication.
4. Data from Other Sources
16. There has been some work undertaken in the past on aspects of indirect taxation, including
the recovery of foreign VAT and related issues. Collectively, these other works have tended
to bear out the conclusion that there are problems with existing procedures, even if they do
not go on to suggest possible solutions.
17. In addition to recent work done by the International Monetary Fund (IMF), two pieces of
work that would certainly be worth keeping under review are the work that is being done
5
Argentina, Chile, China, India, Israel, Morocco, Russia, Slovenia, and South Africa.

within the EU on its own internal refund procedure6 and the current work being done by the
Australian government.
18. Regarding VAT refunds in general (both domestic and international), according to IMF
research, “refunding of credits *…+ has been a source of tension between tax authorities and
the business sector and, in some countries, has led to complex administrative measures that
have significantly undermined the functioning of the VAT system”7.
19. Work within the EU arose as a result of complaints from businesses about the complexity of
the existing paper-based procedure and the delays associated with it. Indeed, at the time of
making the proposal for a change at the end of 2005, the EU Commission estimated that
53.5% of large companies had not requested refunds to which they were entitled at some
point due to these problems8. The EU Member States have since agreed to introduce an
electronic procedure for their own internal refund procedures, with tighter deadlines and
penalties on Member States if these are not met. That procedure became effective within
the EU with effect from 1 January 2010.
20. In Australia, a recent discussion paper9 notes that although there are limited legislative
impediments to registration by non-residents, identification and documentary requirements
may be practical impediments to registration for some.
21. The consultative paper reacts to these concerns by posing a number of questions including
how to directly address them and alternatively whether a direct refund procedure should be
introduced. In the latter case the question is also raised of whether direct refunds should be
based on reciprocal agreements with other countries as in some European Union countries.
6
Council Directive 2008/9/EC of 12 February 2008, Official Journal of the European Union L44 of 20 February 2008 p.23, formerly known
as the EC 8th VAT Directive.
7
IMF Working Paper WP/05/218 VAT Refunds: A Review of Country Experience, Harrison, G. and Krelove, R. IMF 2005.
8
See Report from the European Commission COM(2004)728 FINAL.
9
Review of the Application of GST to Cross-Border Transactions, Discussion Paper, The Australian Board of Taxation, July 2009.

III. Relief Procedures
1. Overview
22. Since the early results from the data-gathering work showed that 20 of the 31 countries that
responded to the questionnaire were using direct refund procedures, additional work was
devoted to this specific mechanism. However, this does not mean that this mechanism is
considered “preferable” to other existing mechanisms.
23. Although there are many individual procedures that aim to relieve foreign businesses of the
local VAT burden, countries that operate a VAT system are generally divided into two
groups:
• Countries where a form of direct refund procedure is not available, but where there is
generally a wider range of zero-rating provisions for supplies to foreign businesses.
These countries tend to supplement their rules with the ability to register for VAT (with
or without restrictions) and with other business simplifications;
• Countries where it is expected that local VAT will be charged on certain supplies to
foreign businesses (by virtue of the rules determining the taxation of supplies), hence
where a form of direct refund mechanism is available with or without restrictions.
Examples of procedures from these two groups follow.
2. Relief Procedure in New Zealand
24. New Zealand’s approach to attaining neutrality in relation to international services is first to
zero-rate supplies to non-residents who are outside New Zealand at the time of
performance and secondly to zero-rate a range of other specific supplies. Exports of goods
and certain services in connection with the export of goods are also zero-rated.
25. Non-resident businesses may, in certain circumstances, also register for VAT and claim
refunds of VAT charged where inputs exceed outputs.

3. Relief Procedure in Canada
26. Generally, Canada does not utilise refund procedures to deal with VAT properly payable by
foreign businesses not registered for Canadian VAT purposes. Canada does rely extensively
on zero-rating to provide relief to foreign businesses where appropriate. However, the zero-
rating rules do not provide relief in all cases. Therefore, assuming zero-rating relief is not
available and depending on the facts and circumstances, the Canadian VAT rules may
provide relief in another form for foreign businesses by involving Canadian VAT-registered
suppliers and customers who are transacting with the foreign businesses.
27. For example, one such rule allows for no VAT to be charged to a foreign business on an
otherwise taxable supply of goods in Canada provided the supplier to the foreign business
receives a “drop shipment certificate” from a VAT registered person (e.g., the foreign
business’ Canadian customer) who is physically receiving the goods in Canada from the
supplier.
28. Another rule allows a foreign business to “flow through” VAT paid on the importation of
goods into Canada or paid to a VAT registered person to its VAT registered customer or
supplier, who will in turn recover that VAT through its VAT returns. For both of these rules,
there is a VAT registered person in the process to which the government authorities can
enforce action against should it be determined that the VAT relief that was obtained was not
appropriate.
4. Relief Procedure in Morocco
29. Morocco does not operate a refund procedure for foreign businesses that incur VAT on their
Moroccan purchases. To achieve neutrality in respect of supplies to international businesses,
Morocco relies primarily on the zero-rating of exported goods and services.
30. This is complemented by a procedure available to certain qualifying industry sectors, where,
subject to certain conditions, qualifying foreign businesses are issued with a VAT exemption
certificate allowing them to buy free of VAT certain purchases that would otherwise be
subject to the applicable VAT rate, such as supplies where consumption occurs in Morocco
and supplies that are not exported (e.g. oil prospecting, foreign cinematographic production,
etc.).
5. Relief Procedure in the European Union
31. European businesses, which incur VAT in connection with their business activities in a
Member State of the European Union in which they do not make supplies of goods or
services, are entitled to deduct the VAT charged in that Member State. This “deduction” is
by means of an effective VAT refund by the Member State in which the VAT was paid.
However, some Member States apply limitations to this right to deduct input VAT

(e.g. restaurant costs, entertainment activities, cars, fuel etc.). From 1 January 2010, the
paper-based procedure for reimbursement of VAT incurred by these EU business persons
has been replaced by a new and fully electronic procedure10. The new procedure is
expected to facilitate claims and ensure a quicker refund. Another new feature is that
interest will be paid if Member States make late refunds.
32. Businesses not established within the European Union that incur VAT in connection with
their business activities in a Member State, in which they do not make supplies of goods or
services, are in principle also entitled to deduct the VAT charged in that Member State. This
'deduction' is again by means of a VAT refund from the Member State in which the VAT was
paid, but may be conditional upon the granting by third countries of comparable advantages
regarding turnover taxes. This refund procedure was not changed on 1 January 201011.
6. Conclusion
33. The previous paragraphs highlight the fact that OECD countries and non-OECD economies
take different approaches to ensure that foreign businesses involved in international trade
do not suffer a local VAT burden. In addition to the two mainstream procedures of wider
range zero-rating provisions and refund procedures, other supplementary approaches have
been identified, such as refunds through registration, shifting responsibility onto locally
registered suppliers/customers and the granting of purchase exemption certificates. It is
likely that other procedures and specific reliefs exist and that countries may use a
combination of different approaches.
10
Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive
2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State (Official Journal
L 44, 20.2.2008, p. 23). Prior to 1 January 2010, the rules for such refunds were provided for in the Eighth Council Directive 79/1072 /EEC
of 6 December 1979 on the harmonization of the laws of the Member States relating to turnover taxes — Arrangements for the refund of
value added tax to taxable persons not established in the territory of the country (Official Journal L 331, 27.12.1979, p. 11).
11
Thirteenth Council Directive 86/560/EEC of 17 November 1986 on the harmonization of the laws of the Member States relating to
turnover taxes - Arrangements for the refund of value added tax to taxable persons not established in Community territory (Official
Journal L 326, 21.11.1986 p. 40).

IV. Results from the Government Survey
34. Since refund approaches are used by a majority of OECD countries, the following paragraphs
examine in more detail some of the main features and possible problems that are linked to
the refund procedure.
35. This outline does not, however, represent a comparative study of the advantages and
disadvantages of the different relief procedures and is therefore not intended to promote
or, on the other hand, to discourage the choice or use of a particular relief procedure.
1. Time Limits to Submit Refunds
36. In most countries, there are strict time limits for submitting refund claims and the right to
refund is lost after the time limit has expired. However certain countries have procedures in
place for late applicants. For example, in one country, non-established businesses have the
right to object to the foreclosure decision by filing a justified complaint. In another one, late
applications are taken into consideration, as long as it is less than five years since the end of
the year to which the application relates.
2. Restrictions to Refunds
37. Generally, countries do not apply specific restrictions on foreign businesses regarding the
type of expenses that give rise to a right for refund. However, three countries do apply
some restrictions. In the first one, refunds to foreign businesses are limited to certain
expenses such as purchase of goods and services relating to transportation activities and
participation in fairs and exhibitions. In the second one, refunds of VAT incurred on the
purchase of fuel are excluded for certain claimants, based on the country where they are
established. The last one applies a limited list of items for which refunds to foreign
businesses are allowed.
3. Formalities
38. Countries usually require claimants to provide original invoices and tax registration
certificates to support their refund claims. These documents do not normally require
notarisation but this is the case in a couple of countries. In one of them, the document
substantiating that the claimant qualifies as a business must be authenticated by the
authorities of the country in which the claimant is established if that country is not party to

The Hague Convention12. In the other, refund claims completed by an intermediary should
be supported by a notarised ‘Letter of Authority’.
4. Reciprocity
39. Ten respondent countries require some kind of reciprocity with the claimant’s home country
in order to allow refunds to be made.
40. In particular, EU Member States are allowed to use reciprocity as a condition for refunding
to non-EU businesses under Directive 86/560/EEC, widely known as the 13th VAT Directive.
This is mainly based on the requirement that these countries provide similar advantages to
their businesses when they incur consumption taxes (VAT/GST or sales taxes) there.
41. The requirements for reciprocity generally take two main forms: the requirement for formal
bilateral agreements between countries (required by six countries) or unilateral decisions to
recognise countries considered as having (or not having) appropriate features in their
legislation (four countries). A mix of these forms of reciprocity requirements can exist in
countries where formal reciprocity agreement with the country of the claimant is not
required. However, each claimant must provide a certificate showing that their home
country recognises reciprocity of treatment. There is no such requirement for countries
with which a formal bilateral agreement exist (one country).
42. Generally, it seems fair from a policy perspective for a country to allow refunds or relief to a
foreign business that is not registered in that country having regard to the fact that:
(i) This is in line with the principle of neutrality (i.e., a foreign business should not be
disadvantaged nor advantaged compared to a domestic business); and
(ii) The home country of the foreign business would provide the same or similar relief to a
foreign business incurring VAT in that home country.
Taken together, factors (i) and (ii) provide the rationale for reciprocity and, ultimately, for
fair and equitable results.
43. There appears to be a lack of consistency in the application of reciprocity by different

countries. For example, the term “turnover tax” does not seem to be consistently defined as
relating to a tax collection in a staged process. Some countries have a black and white list of
countries for allowing claims but these differ between countries. Moreover, there appears
to be a narrow view of what is considered to fall within the realm of reciprocity.
12
The Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents is a convention of the Hague
Conference on Private International Law signed in 1961. It specifies the modalities through which a document issued in one of the
signatory countries can be certified for legal purposes in all the other signatory states. Such a certification is called an apostille. It is an
international certification comparable to a notarisation and is often added to documents that have been in some manner signed by a
notary, lawyer or other public official.

44. To this end, where alternative means of relieving VAT are adopted (as per paragraphs 24 to
30 above, e.g., broader zero-rating, relying on domestic registrants as a conduit for relief,
voluntary registration13, purchase exemption certificate, etc.), these are likely to achieve the
same result that the burden of value added taxes themselves does not lie on the foreign
business, except where explicitly provided for in the legislation.
5. Exposure to Refunds
45. The exposure of countries to cross-border refund claims varies widely (see Table 1 overleaf).
Five countries deal with more than 50 000 claims a year while eleven countries deal with less
than 10 000 claims a year. On average, countries deal with 27 500 claims a year, with two
countries well above (more than 100 000 claims a year) and four countries well below (less
than 1 200 claims a year).
46. The percentage of amounts claimed that are actually refunded appears relatively high, with
an average of 78.7% and with ten countries above 90%; eight countries between 70% and
90% and only two countries below 50%.
47. The average amount refunded by claim varies widely between countries from USD 3 235 to
USD 136 791, with an average of USD 20 530.
48. Notes for reading Table 1:
• The average amount refunded by claim is calculated by dividing the global amount
refunded by the number of claims received and actually refunded.
• An approximation of the number of claims received and actually refunded is obtained by

applying the percentage of the amounts claimed and actually refunded to the number of
claims. This is not perfectly accurate since it compares the percentage of amounts
refunded with the number of claims received, but it provides a good approximation for
comparison purposes.
• For Member States of the European Union, figures show the amounts relating to refunds
to non-EU claimants only (i.e. 13th VAT Directive claims).
13
In cases where refund mechanisms to foreign businesses are not available, some countries allow non-established businesses to
voluntarily register and reclaim the VAT incurred through a standard VAT return. However, this registration may be submitted under
certain conditions and have an impact on the claimant’s rights and obligations in the country. In some countries registration under a local
VAT number is not possible unless the business makes taxable supplies in the country. In some cases, registration may influence the
broader VAT treatment of cross-border services e.g. the supplier paying the VAT rather than it being accounted for by the customer
through the reverse-charge mechanism, where this is in line with local practices.

Table 1
Countries’ exposure to refunds
Countries Number of refund Amounts actually Percentage of the Average refund by
claims received refunded amounts claimed claim
actually refunded
A 52 4 765 803 67.0% 136 791
B 146 1 200 000 90.8% 9 052
C 1 000 8 360 000 76.0% 11 000
D 1 100 27 500 000 70.0% 35 714
E 2 422 29 833 870 60.2% 20 462
F 3 000 48 000 000 74.2% 21 563
G 3 055 63 271 000 93.0% 22 270
H 3 622 11 000 000 76.0% 3 996
I 4 500 71 617 000 75.0% 21 220
J 5 279 52 181 000 88.0% 11 233
K 9 731 366 000 000 99.1% 37 953
L 10 000 41 887 000 90.0% 4 654
M 10 947 108 000 000 40.0% 24 664
N 13 000 159 000 000 94.2% 12 984
O 15 000 114 000 000 94.0% 8 085
P 16 000 175 000 000 77.0% 14 205
Q 20 000 90 000 000 96.6% 4 658
R 20 400 236 626 000 92.0% 12 608
S 51 700 689 000 000 95.0% 14 028
T 60 000 725 000 000 96.7% 12 496
U 63 818 477 000 000 85.0% 8 793
V 103 000 873 000 000 Not available Not available
W 212 605 6 877 000 1.0% 3 235
Average 27 408 190 396 464 78.7% 20 530
All the amounts are in USD
6. Fraud and Avoidance Issues
49. Granting refunds to businesses with no “legal” presence in a country inevitably brings an
element of risk for tax administrations. The absence of any jurisdictional power over that
business or the lack of appropriate exchange of information procedures or assistance in
recovery may well leave the tax administration exposed to fraudulent claims, with no legal
provision for imposing or enforcing penalties, nor with any hope of recovering any undue
refund payments. Recent modernisation work in the European Union (reform of the internal
EU refund procedure) recognised the importance of the link between reliable exchange of
information procedures and administrative cooperation and the development of simpler and
more efficient refund procedures.
50. The OECD has worked on improving the legal framework for exchange of information for
both direct and indirect tax purposes. Article 26 of the Model Tax Convention on Income
and Capital provides that “the competent authorities of the Contracting States shall
exchange information as is foreseeably relevant *…+ to the administration and enforcement
of the domestic laws concerning taxes of every kind and description”. The extension of

Article 26 to cover taxes of every kind and description was introduced in 2000 (previously,
exchange of information was limited to the taxes covered by the Convention). An increasing
number of bilateral treaties are based on the updated Article 26 and include exchange of
information for VAT purposes, although the revision of bilateral treaties will take
considerable time.
51. Another tool is the joint Council of Europe/OECD Convention on Mutual Administrative
Assistance in Tax Matters, which provides for exchange of information on all taxes. The
fourteen countries14 which are already parties to the Convention can exchange VAT
information under this instrument.
52. Other tools for exchange of information in tax matters (including VAT) also exist, such as the
Nordic Mutual Assistance Convention on Mutual Administrative Assistance in Tax Matters15
and European Union Regulation No 1798/2003 of 7 October 2003.
14
Parties to the Convention are: Azerbaijan, Belgium, Denmark, Finland, France, Iceland, Italy, Netherlands, Norway, Poland, Sweden,
Ukraine, United Kingdom and United States. Canada, Germany and Spain have signed the Convention and are still in the process of
ratification.
15
Parties to the Convention are: Denmark, Finland, Iceland, Norway and Sweden.

V. Results from the Business Survey
1. Highlights
H1. The answers show a very broad representation of companies and industries, as well as
business sizes and geographic locations, with no abnormal dominance that could distort the
analysis. This enables some solid and credible conclusions to be drawn.
H2. 80.2% (247) of businesses incur expenditure in foreign countries and, of those, 95.5% (236)
incur it in more than one country, with a good spread across the different regions of the
world.
H3. 94.7% of the main panel, the 247 respondents that incur business expenditure in foreign
countries, declared that they incur VAT on their foreign expenditure.
H4. Nearly 21% of businesses are actually unable to recover any of the foreign VAT they incur on
business expenditure.
H5. Less than 20% of businesses are actually able to recover the foreign VAT they incur on
business expenditure in all the countries where they incur VAT on such expenditure.
H6. Within the range of reasons why businesses are not able to recover foreign VAT, many are a
direct result of tax authorities’ policies or procedures.
H7. 90.9% of businesses use direct VAT claims and 42.7% of businesses use local VAT registration
to seek foreign VAT refunds.
H8. Over 98% (225 out of 228) of businesses are aware of the magnitude of the amounts of
foreign VAT that they incur.
H9. Businesses incur significant amounts of VAT on foreign business expenditure. The answers
show that:
• Over 80% incur more than USD 10 000 per annum;
• Over 50% incur more than USD 100 000 per annum; and
• Over 25% incur more than USD 1 million per annum.
H10. The 98 businesses that were able to provide a geographic allocation of the foreign VAT that
they incur on business expenditure indicated that they incur, collectively, just over
USD 1 billion of foreign VAT per annum.
H11. The respondents to the survey incur VAT in all parts of the world, with a dominance of
Europe and, in particular, the EU Internal Market.

H12. Not all foreign VAT claims fall into the common category “travel expenditure &
conferences/trade shows”. Whilst almost all businesses would incur foreign VAT on such
expenditure, a significant number incurs foreign VAT on goods (inc. tooling, stock, etc.) and
general services (inc. professional and back office services).
H13. A high proportion of businesses find procedures for refunds generally difficult to contend
with – almost 72% expressed a degree of difficulty.
H14. Key factors determined by businesses to assess the ease or difficulty of a foreign VAT refund
procedure seem to be:
• Communication with the authorities, including guidance, forms and procedures; and
• Speed of repayment.
H15. Local language and cost efficiency are the main factors that drive at least 56.4% of
businesses to fully or partially outsource the management of their foreign VAT refund
claims.
H16. About half of businesses have stopped claiming VAT in some countries, citing “the amounts
incurred are not worth the trouble” and/or “the administration is too difficult” as the key
reasons.
H17. Half of businesses recover 50% or less of the foreign VAT they incur and a quarter recover
less than 25%.
H18. Over half of businesses incur costs to obtain refunds that are 15% or less of the amounts
recovered. However, for more than a third of businesses, the costs are between 16% and
50% of the amounts recovered.
H19. According to businesses, tax authorities take a long time to pay, with well over half of all
claims taking 6 months or more to be refunded, and half of those taking over a year.
H20. When they do so, businesses seem to be successful in appealing against denied claims, as
89% of those concerned confirm that they have been successful in at least some of their
cases.
H21. In terms of doing business in a particular jurisdiction, over a third of businesses are
influenced by the potential to incur foreign VAT and nearly 40% have implemented
legitimate alternatives to avoid paying it or going through refund procedures.
H22. In order to improve the procedures, businesses would like to see:

• Improved communication with tax administrations, including in terms of administrative
guidance (clarity of the rules), interaction with individual businesses (taxpayer service)
and means of communication (use of modern communication technologies);
• Harmonisation and standardisation of the rules, procedures and forms; and
• Quicker repayments from tax authorities.

2. Outline of the Summary Analysis
53. This is a summary analysis of the business survey on refund mechanisms. The purpose was
to assess the scope and magnitude of VAT incurred by businesses in foreign jurisdictions,
businesses’ experience with the refund mechanisms available and the scope and magnitude
of associated costs.
54. The business survey was based on an online questionnaire that adopted an interactive
format, rather than a linear format. Respondents were directed to certain questions, based
on their answers, rather than having to answer all questions in order, even if not relevant.
Accordingly, none of the respondents had to answer all the 75 questions that made up the
questionnaire. In addition, respondents were able to skip certain questions. Overall, it
means that the number of respondents per question is not linear. This summary provides
the number of responses to the questions analysed.
55. The questionnaire was first made available on the OECD website on 5 June 2009 with a
deadline of 17 July 2009 for responses. That was then extended to 14 August 2009. It was
promoted via the OECD’s normal channels, as well as through business associations, industry
groups, international business networks and articles in the specialised press.
56. The questionnaire was organised around 3 main sections:

 Section 1: Tell Us about You and Your Business
 Section 2: Tell Us about Your Business Experience with Foreign VAT
 Section 3: What is Your Business Experience with Foreign VAT Reclaims?
57. This summary analysis is organised in a similar way.
58. At the end of Section 3 of the questionnaire, respondents were also asked to identify things
that might make a difference. The responses form the basis for the “Suggestions for the
Future” section, which concludes this summary analysis.

3. Section 1: Tell Us about You and Your Business
59. This section is about the profiling of the respondents, to understand who they are, their size,
location and type of industry they are involved with.
3.1. Size and Quality of Panel/Sample
60. 308 businesses responded to the questionnaire. Such a level of participation confirmed the
interest raised by the refund issue. The sample is large enough to draw valid conclusions
from the responses and provides a good basis for analysis.
61. It is always difficult to determine the “representativeness” of such a sample, drawn from a
voluntary response to a questionnaire rather than a selection of businesses within a given
population. However, the answers show a broad representation of companies and
industries, with no abnormal dominance that could distort the analysis.
3.2. Size/Type of Business
62. Figure 1 shows a dominance of large businesses and multinationals (70.8% – in pink and red)
in the composition of the sample/panel. Smaller businesses, such as sole entrepreneurs and
small & medium size businesses (SMEs) still achieve a reasonable representation, with 25.7%
(in dark and light blue). A small percentage of respondents (3.6% – in green) identified
themselves as “other” (including partnerships, charities, etc).
Figure 1: What best describes the business or group you work for?
31
(10.1%)
72
(23.4%) Sole Trader /
Individual Entrepreneur
Small or Medium Size
Business
7 Large Business
(2.3%)
11
(3.6%)
Multinational Group
187
(60.7%) Other
63. This dominance of larger businesses is expected in a survey that focuses on cross-border
trade and therefore confirms the overall quality of the sample/panel.
3.3. Location of Respondents
64. Table 2 overleaf shows that the geographical spread of respondents covers a large number
of countries (33 countries). 61.2% are in the EU (thus 38.8% non-EU), 89% are in the OECD

area and 11% outside of the OECD. The dominance of the EU is to be expected because of
the Common Market and is, at 61.2%, not an abnormal result.
Table 2
Select the country where Your Business has its head-office (308 responses)
N° Country Number of In %
Votes
OECD member countries
1 Belgium* 9 2.9%
2 Canada 45 14.7%
3 Denmark* 2 0.6%
4 France* 22 7.3%
5 Germany* 18 5.9%
6 Hungary* 2 0.6%
7 Ireland* 1 0.3%
8 Italy* 17 5.5%
9 Japan 6 1.9%
10 Korea 1 0.3%
11 Luxembourg* 4 1.3%
12 Mexico 4 1.3%
13 Netherlands* 10 3.2%
14 Norway 4 1.3%
15 Portugal* 32 10.6%
16 Spain* 2 0.6%
17 Sweden* 8 2.6%
18 Switzerland 9 2.9%
19 United Kingdom* 38 12.4%
20 United States 39 12.8%
Total OECD 273 89%
Non-OECD countries
21 Bulgaria* 2 0.6%
22 Costa Rica 1 0.3%
23 Hong Kong 1 0.3%
24 India 1 0.3%
25 Indonesia 1 0.3%
26 Israel 1 0.3%
27 Jersey 1 0.3%
28 Liechtenstein 1 0.3%
29 Malaysia 1 0.3%
30 Singapore 2 0.6%
31 Slovenia* 21 6.8%
32 Thailand 1 0.3%
33 Togo 1 0.3%
Total non-OECD 35 11%
Total European Union 188 61.2%
Total 308 100%
* = Member States of the European Union

65. It is true that the survey was conducted in English only, which may have influenced the
composition of the sample (essentially for SMEs since English is used in most multinational
businesses (MNEs)). Since the survey focused solely on VAT (and not on other taxes) there
may be a sample bias towards respondents in jurisdictions with a high VAT profile. However,
the geographical coverage of the sample is large enough to avoid any significant
geographical distortion in the results.
3.4. Industry of Respondents
66. The responses cover a very broad spectrum of industries, as shown in Figure 2 below and
Table 3 overleaf. Manufacturing is the highest with nearly 28%. Intellectual services and
financial services (both with 7.8%) follow with consumer goods next (6.2%).
Figure 2: What industry best describes the main activity of Your Business?
Banking, Life Insuranc
Consumer Goods
24
47 (7.8%)
(15.3%) 5
Education, Health, So
19
(1.6%) Energy Production, Su
(6.2%)
Food Production
15 14
Intellectual Services (
(4.9%) (4.5%)
4
8 IT & Technology
(1.3%)
(2.6%)
Mail Order Retailers (i
12
(3.9%) 13 Manufacturing
(4.2%)
Media & Entertainmen
15
(4.9%) Publishing
Banking, Life Insurance, Financial
24 Services, Brokerage
(7.8%) Real Estate
24 Consumer Goods
9
47 (7.8%) Retail Trade
(15.3%) (2.9%) Education, Health, Social Services
3 19 5 Telecommunications &
(6.2%) (1.6%) Energy Production, Supply or Transport
(1.0%)
2 Transport
2 Food Production (0.6%)
(0.6%) 14 86 Travel
15
(4.9%) (4.5%) Intellectual Services (Consulting, Legal, Accounting, Audit, etc.)
(27.9%)
6
8 Wholesale Trade
(1.9%) (2.6%) IT & Technology
Other
Mail Order Retailers (including Online and Catalogue Sales)
)
13 Manufacturing
(4.2%)
Banking, Life Insurance, Financial Services, Brokerage Media & Entertainment
%)
Consumer Goods Publishing
24
Education, Health, Social Services (7.8%) Real Estate
5
6%) Energy Production, Supply or Transport Retail Trade
Food Production Telecommunications & Broadcasting (including Telephony, Internet, etc.)
2 Audit, etc.)
Intellectual Services (Consulting, Legal, Accounting, Transport
(0.6%)
8 86
(2.6%) IT & Technology Travel
(27.9%)
Mail Order Retailers (including Online and Catalogue Sales) Wholesale Trade
3 Manufacturing Other
%)
Media & Entertainment
Publishing
Real Estate
Table 3
What industry best describes the main activity of Your Business? (308 responses)
Industry Number In %
of votes
Manufacturing 86 27.9%
Other * 47 15.3%
Banking, Life Insurance, Financial Services, Brokerage 24 7.8%
IT & Technology 24 7.8%
Consumer Goods 19 6.2%
Telecommunications & Broadcasting (inc Telephony, Internet, etc.) 15 4.9%
Wholesale Trade 15 4.9%
Energy Production, Supply or Transport 14 4.5%
Intellectual Services (Consulting, Legal, Accounting, Audit, etc.) 13 4.2%
Transport 12 3.9%
Retail Trade 9 2.9%
Food Production 8 2.6%
Media & Entertainment 6 1.9%
Education, Health, Social Services 5 1.6%
Travel 4 1.3%
Real Estate 3 1.0%
Mail Order Retailers (including Online and Catalogue Sales) 2 0.6%
Publishing 2 0.6%
Total 308
* The review of the comments posted by the respondents who selected “Other” shows a wide
variety of industries, including automotive, construction, heavy machinery, hospitality and
pharmaceuticals, as well as the industries linked to these (such as support and engineering). Several
of these respondents also belong to groups involved in several industries.
Highlight 1
The answers show a very broad representation of companies and industries, as well as business sizes
and geographic locations, with no abnormal dominance that could distort the analysis. This enables
some solid and credible conclusions to be drawn.

4. Section 2: Tell Us about Your Business Experience with Foreign VAT
67. This section is about understanding the extent of the respondents’ involvement with
“foreign” cross-border trade and their exposure to foreign VAT. Respondents were
informed that, for the purpose of the questionnaire, “foreign” means a country where the
respondents are not established or VAT-registered as a result of their normal day-to-day
activities.
4.1. Business Experience with Foreign Business Expenditure
68. Figure 3 shows that 80.2% of the respondents (247)

indicated that they incur business expenditure in Figure 3: Has Your Business incurred
countries where they are not established or registered costs in foreign countries?
as a result of their day-to-day activities. Compared to
Figure 1, it shows that SMEs and smaller businesses
that completed the questionnaire also incur business 61
(19.8%)
expenditure in foreign countries. On the other hand,
19.8% of responses (61) indicated that they do not
Yes
incur such costs. No
247
(80.2%)
69. Taking into account the structure of the interactive
questionnaire, these 61 respondents would then have
been sent to the very last section of the questionnaire
(see section 5.5 of the report). Accordingly, the sub-
group of 247 respondents constitutes the main panel
for the analysis of the survey.
4.2. Countries where Business Expenditure Has Been Incurred
70. According to Figure 4, 4.5% (11 out of 247 businesses) Figure 4: In how many foreign countries
incur expenditure in only one country; 15.4% (38) in has Your Business incurred
expenditure?
more than one country but all within the European
Union and the vast majority, 80.2% (198), in more
than one country, including one or more outside the 38
European Union. This confirms that the panel is not 11 (15.4%)
(4.5%)
EU-centric and that the results of the questionnaire Only 1
are based on an experience of different systems and

More than 1
regions. (all EU)
198
(80.2%) More than 1
71. For businesses that incur business expenditure in only (inc non-EU)
one country, the size of the sample (11 responses) is
not big enough to separately draw relevant
conclusions as to the geographical spread or
difficulties encountered.

72. For businesses that incur expenditure in more than one country, but all within the EU, the 38
responses (15.4% of the 247 businesses of the main panel) show a pretty good spread across
countries with more than 5 countries per business on average (for a total of 215 votes).
Expenditure is incurred in all the 27 Member States, with Germany (24 votes), Spain (20
votes), France (18 votes), Italy (14 votes) and UK and Belgium (13 votes each) being the top
6. This probably reflects the reality of the Internal Market.
73. The vast majority of the main panel of respondents incur expenditure in more than one
country and not wholly in the European Union (198 responses, i.e. 80.2% of the main panel).
The geographical spread by regions where expenditure is incurred is pretty well balanced
(see Figure 5): Europe (EU), 196 votes (99% of the respondents have incurred expenditure in
at least one EU country); Europe (non-EU), 159 votes (80.3% of respondents have incurred
expenses there); Asia, 130 votes (65.7%); North America, 110 votes (55.6%); Australia/New
Zealand, 78 votes (39.4%); South America, 76 votes (38.4%); Africa, 66 votes (33.3%). Only
4 respondents were unable to tell the regions where their expenses were incurred, which is
negligible.
Figure 5: In which regions has Your Business incurred expenditure? (multiple choice)
TOTAL RESPONDENTS 198

Europe (EU) 196
Europe (non-EU) 159
Asia 130
North America 110
Australia / New Zealand 78
South America 76
Africa 66
Don't know 4
0 50 100 150 200
74. 172 respondents gave more detailed information about the countries where the expenses
are incurred, providing a spread across 175 countries with an average of 17.8 countries per
respondent (3 068 votes). Out of the 175 countries where business expenses were incurred
by respondents, 142 have a VAT system in place.
75. The size of the sample and the geographical spread of countries where business expenses
are incurred confirm Highlight 1 about the validity of the sample.
Highlight 2
80.2% (247) of businesses incur expenditure in foreign countries and, of those, 95.5% (236) incur it in
more than one country, with a good spread across the different regions of the world.

4.3. Is VAT Incurred on the Foreign Business Expenditure?
76. Only 2.8% of the main panel (7 respondents) declared that they do not incur VAT on their
foreign expenditure. On the other hand, 94.7% (234 respondents) declared that they incur
VAT on such expenditure. Only a marginal number of the main panel (2.5% – 6 respondents)
did not know whether they incur such foreign VAT. This reflects the wide spread of VAT
across countries and confirms that the main panel has experience of foreign VAT systems.
Highlight 3
94.7% of the main panel, the 247 respondents that incur business expenditure in foreign countries,
declared that they incur VAT on their foreign expenditure.
4.4. Who Recovers VAT in Foreign Countries?
77. 20.9% of the respondents (i.e. 49 out of 234) who indicated that they incur foreign VAT said
they are unable to recover any of that tax (Figure 6 below).
Highlight 4
Nearly 21% of businesses are actually unable to recover any of the foreign VAT they incur on business
expenditure.
78. According to Figure 6, 71.8% (i.e. 168 out of 234 – in green) said they are able to claim but,
of that number, 73.3% (i.e. 123 of the 168 – Figure 7 in red and blue) said that they only
claim in some or just one of the countries where they incur foreign VAT.
Figure 6: Is Your Business able to recover Figure 7: If Yes, in how many countries?
any of the foreign VAT?
49
(20.9%) 45
(26.8%) All of Them
Yes
17
(7.3%) Some of
168 Don't Know 115 Them
(71.8%) 8 (68.5%)
(4.8%) One of Them
No

79. Overall, combining the results of Figure 6 and Figure 7 (overleaf), only 19.2% (i.e. 45 of 234
respondents) are able to recover foreign VAT in all the countries where they incur such VAT.
73.5% (i.e. 172 of 234 respondents) do not claim foreign VAT in all the countries where they
incur such VAT.
Highlight 5
Less than 20% of businesses are actually able to recover the foreign VAT they incur on business
expenditure in all the countries where they incur VAT on such expenditure.
80. When asked about the reasons (multiple choice) preventing them from making foreign VAT
reclaims, they selected on average 3.7 reasons, as outlined in Table 4 below.
Table 4
16
Why can’t Your Business recover the VAT? (172 responses – multiple choice)
Reason Number In %
of votes (of 172 responses)
The tax authorities make claiming refunds too difficult 113 65.7%
The tax authorities will not refund VAT to a foreign business 96 55.8%
The amounts involved are too small 88 51.2%
The costs of recovery are too high 79 45.9%
There is no reciprocity arrangement between the two countries 67 39.0%
It would need to register for VAT 60 34.9%
The tax authorities will not allow a foreign business to register & 46 26.7%
recover VAT without having a taxable activity in the country
The tax authorities will not allow a foreign business to register & 45 26.2%
recover VAT without creating a branch or another establishment in
the country
The accounting system does not identify the VAT incurred abroad 24 14.0%
Some other reason 4 2.3%
Total 622
81. The main factor, chosen by two thirds of the respondents is that the tax authorities make
claiming refunds too difficult. The second highest factor, chosen by over half of the
respondents is that the tax authorities will not refund VAT to a foreign business. Taken
together with the requirement to register and the associated difficulties (i.e. having an
establishment in the country or having a taxable activity in the country) this means that
more than half (57.8% or 360 votes out of 622 – in red and pink in Table 4) of the votes
concentrate on the difficulties imposed by foreign tax authorities on non-established and
non-registered businesses, in relation to foreign VAT reclaims.
16
This question allowed for multiple choice responses, so each respondent may have chosen more than one reason. With a total of 622
votes, the average here is actually 3.7 votes per respondent.

82. The other 2 reasons (of the top 4 – in blue in Table 4) confirm that businesses apply a
common cost/benefit test when assessing whether to reclaim foreign VAT. Further
information on amounts and costs is available later in this report (see sections 4.5 and 5.4).
Highlight 6
Within the range of reasons why businesses are not able to recover foreign VAT, many are a direct
result of tax authorities’ policies or procedures.
83. As regards the method of recovery (Figure 8 below), 90.9% (130 out of 143) of the
respondents indicated that they use direct refund claims whilst 42.7% (61 out of 143) use
local VAT registration. A proportion of respondents use a combination of both methods.
Only 2.8% of respondents did not know the way foreign VAT was recovered. In the
questionnaire, both methods have been combined.
Figure 8: What are the methods of foreign VAT recovery? (multiple choice)
TOTAL NUMBER OF RESPONDENTS 143
Direct Claim 130 Don't Know
Local Registr
Local Registration 61
Direct Claim
Don't Know 4
0 20 40 60 80 100 120 140 160
Highlight 7
90.9% of businesses use direct VAT claims and 42.7% of businesses use local VAT registration to seek
foreign VAT refunds.
4.5. What Is the Magnitude of the Foreign VAT Incurred?
84. According to Figure 9 overleaf, the 228 respondents that incur VAT on foreign business
expenditure are generally well aware of the amounts at stake. Indeed, 18.9% (43) of the
respondents are able to provide the actual annual amount of VAT incurred and 52.2% (119)
are able to provide an annual estimate. Altogether, this means that 71.1% (162) of
respondents are aware of the amounts.

Figure 9: Do you know the amount of foreign Figure 10: If you cannot estimate, do you
VAT incurred by Your Business? consider the amounts to be:
43
66 (18.9%) Negligible
Know the Amount 22
(28.9%) (33.3%) 28
Low
(42.4%)
Can Estimate
High
the Amount
Very High
119 Cannot Estimate
the Amount 5
(52.2%) Don't Know
(7.6%)
8
(12.1%)
3
(4.5%)
85. Figure 10 provides information about the perception of the 66 respondents in Figure 9 (in
red) that were unable to provide specific amounts or estimates. Of those, 54.5% (36
respondents – in red and pink) considered the amounts involved high or very high. Only
4.5% (3 respondents – in blue) declared not having a feel for the amounts incurred.
86. Overall, looking at Figure 9 and Figure 10 together, this means that over 98% (225 out of
228) of businesses are aware of the magnitude of the amounts of foreign VAT they incur.
Highlight 8
Over 98% (225 out of 228) of businesses are aware of the magnitude of the amounts of foreign VAT
that they incur.
87. Figure 11 overleaf shows that the group of 162 respondents who know or can estimate the
amount of foreign VAT that they incur is split virtually equally between those who incur less
than USD 100 000 foreign VAT a year (48.8% – in dark and light green) and those who incur
more than USD 100 000 foreign VAT a year (51.2% – in yellow to red).
88. Over 80% of respondents incur more than USD 10 000 a year and a quarter of the
respondents (25.3%) declared that they incur more than USD 1 million a year. This reflects
the spread of the sample across the type and size of participating businesses (see
Highlight 1).

Figure 11: What is the amount of foreign VAT incurred by Your Business (in USD)?
18
29
(11.1%)
(17.9%)
Less than 10 000
23
10 001 to 100 000
(14.2%)
100 001 to 500 000
15 500 001 to 1 000 000

50
(9.3%) 1 000 001 to 5 000 000
(30.9%)
27 More than 5 000 000
(16.7%)
Highlight 9
Businesses incur significant amounts of VAT on foreign business expenditure. The answers show
that:
 Over 80% incur more than USD 10 000 per annum;
 Over 50% incur more than USD 100 000 per annum; and
 Over 25% incur more than USD 1 million per annum.
4.6. Where Is Foreign VAT Incurred?
89. The amounts of foreign VAT incurred vary widely depending on the regions (Table 5
overleaf). The European Union is the region where the amounts are the highest both in
terms of the number of businesses concerned (93 votes) and value (a total of more than
USD 820 million). The average amount by vote is also the highest there (approximately
USD 8.9 million). This dominance probably reflects the intensity of the exchanges on the
Internal Market and the higher standard VAT rates in this area.
90. Looking at the total amounts, this region is followed by Europe (non-EU); Asia,
Australia/New Zealand, South America, Africa and North America. The average amount
analysis shows a similar ranking between the regions. North America is not unexpectedly at
the bottom of the list as the USA does not have a VAT-type tax and the standard rate in
Canada is either 5% or 13% depending on the province.

Table 5
17 18
Amounts of VAT (in USD ) incurred by regions (98 responses – multiple choice)
Region Number Total amount Average amount incurred
of votes (USD) (USD)
Europe EU 93 826 860 000 8 891 000
Europe non-EU 37 116 906 000 3 160 000
Asia 26 26 322 000 1 012 000
Australia/New Zealand 17 19 331 000 1 137 000
South America 20 11 556 000 578 000
Africa 16 9 516 000 595 000
North America 27 6 442 000 239 000
Total 236 1 016 933 000
Highlight 10
The 98 businesses that were able to provide a geographic allocation of the foreign VAT that they
incur on business expenditure indicated that they incur, collectively, just over USD 1 billion of foreign
VAT per annum.
Highlight 11
The respondents to the survey incur VAT in all parts of the world, with a dominance of Europe and,
in particular, the EU Internal Market.
4.7. Profile of Foreign VAT Claims

Figure 12: What best describes the foreign VAT
91. Figure 12 shows that, of the 228 businesses that Your Business incurs?
that answered this question, 40.3% (92 – in

dark and light green) indicated that their 37
(16.2%)
foreign VAT is essentially made up of small Few Small Amounts
amounts. Lots of Small Amounts

124
Few Large Amounts
(54.4%)
92. By contrast, only 5.2% (12 – in yellow and 55
(24.1%) Lots of Large Amounts
orange) indicated claims were made up of
A Combination of Small
either few or lots of large amounts. & Large Amounts
11
1
(4.8%)
(0.4%)
17
Rounded to the nearest thousand USD.
18
This question allowed for multiple choice responses, so each respondent may have chosen more than one region where VAT is incurred.
With a total of 236 votes, the average here is actually 2.4 votes per respondent.

93. However, the majority of businesses (54.4% – 124 businesses – in red) indicated that their
foreign VAT is made up of a combination of small and large amounts.
94. To assess the type of expenditure on which businesses incur foreign VAT, businesses were
asked to select from a list (Table 6) as many types as relevant. On top of the list is, as
expected, “travel expenditure (hotel, cars, fuel, etc)” (91.6% of businesses selected this
type). This is followed by another expected type: “conferences, seminars, trade shows, etc.”
(76.2%). In third place is “general services and professional fees” (50.7%). Finally, the fourth
highest selection (33.5%) is “purchase of goods”.
Table 6
Can you tell us about the type of expenditure on which Your Business incurs foreign VAT?
19
(227 responses – multiple choice)
Option Number In %
Travel expenditure, such as hotels, taxis, car hire, restaurants and fuel 208 91.6%
(except air travel)
Conferences, seminars, trade shows, training courses, etc. 173 76.2%
General services and professional fees 115 50.7%
Purchase of goods such as tooling, raw materials and stock/inventory 76 33.5%
Transport services (haulage) 65 28.6%
Hire of servers, telecommunication lines, co-location services, 47 20.7%
roaming charges, etc.
Back office services such as payroll, accounts payable, accounts 36 15.9%
receivable, administration and support
Land related costs such as office rental and warehousing 35 15.4%
Other 18 7.9%
Not sure 1 0.4%
Total 774
95. Together with the amounts disclosed in the previous parts of the questionnaire, this
confirms that businesses do not incur foreign VAT solely on travel expenditure.
96. Most businesses incur foreign VAT as a result of their ongoing business operations (86.8%
chose that option), but also as a result of ad-hoc projects (48%) and business development
efforts (35.2%).
Highlight 12
Not all foreign VAT claims fall into the common category “travel expenditure & conferences/trade
shows”. Whilst almost all businesses would incur foreign VAT on such expenditure, a significant
number incurs foreign VAT on goods (inc. tooling, stock, etc.) and general services (inc. professional
and back office services).
19
This question allowed for multiple choice responses, so each respondent may have chosen more than one type of expenditure. With a
total of 774 votes, the average here is actually 3.4 votes per respondent.

5. Section 3: What is Your Business Experience with Foreign VAT Reclaims?
97. This section is about understanding respondents’ involvement with foreign VAT claims to
assess their perception, gauge their experience, evaluate their costs and, finally, understand
what could improve their overall experience.
5.1. Assessment of Refund Procedures by Businesses
98. Figure 13 below shows that businesses overwhelmingly perceive foreign VAT refund
procedures to be generally difficult (71.8% – 173 respondents – from red to pink). Only
11.1% (25 respondents – from dark to light green) find them to be generally easy.
99. Assessing the perceived level of difficulty, almost half (48.9% – 111 respondents – in red and
light red) of businesses consider foreign VAT refund procedures to be often or always
difficult.
Figure 13: Overall, how do you consider procedures for refunds?
2
9 (0.9%) 20
(4%) (8.8%)
33
(14.5%)
14 Always Difficult
(6.2%) Often Difficult
Sometimes Difficult
19
Neutral
(8.4%)
78 Sometimes Easy
(34.4%) Often Easy
52 Always Easy
(22.9%) Don't Know
Highlight 13
A high proportion of businesses find procedures for refunds generally difficult to contend with –
almost 72% expressed a degree of difficulty.
100. Table 7 (overleaf) summarises businesses’ views on why certain refund procedures are
particularly easy. Respondents were allowed to select more than one reason and have, on
average, selected just under 2 each.
101. It is interesting to note that many respondents (83 votes, 40.1%) pointed out that no refund
procedures are particularly easy.

102. That aside, “clear guidance from the tax authorities” came out as the top reason for
procedures to be viewed as easy, chosen by 38.6% of businesses. On the same theme,
33.3% of respondents put “easy communication” in second place. “Quick repayments”
made it to third place, with 31.9% of the votes.
Table 7
20
Why is this particularly easy in some countries? (207 responses – multiple choice)
Option Number In %
of votes (of 207
responses)
No refund procedures are particularly easy 83 40.1%
Clear guidance from tax authorities is available 80 38.6%
Communication with tax authorities is easy 69 33.3%
Actual repayments are quickly made 66 31.9%
Procedures are harmonised between countries 32 15.5%
Electronic submission procedures are available 31 15.0%
Deadlines/procedures for submitting claims are managed by the tax 29 14.0%
administration in a flexible way
Other (please specify) 16 7.7%
Total 406
103. Table 8 summarises businesses’ views on why certain refund procedures are particularly
difficult. Respondents were allowed to select more than one reason and have, on average,
selected 4.2 each, i.e. more than twice as many as for the question on easy procedures.
Table 8
21
Why is this particularly difficult in some countries? (207 responses – multiple choice)
Option Number In %
of votes (of 207
responses)
Actual repayments are made with long delays 133 64.3%
Communication with tax authorities is difficult 121 58.5%
Procedures and claim forms are specific to each country 117 56.5%
Refund procedures are still paper-based (forms, original invoices, etc) 115 55.6%
Guidance from tax authorities is unclear or unavailable 102 49.3%
Deadlines/procedures for submitting claims are managed by the tax 91 44.0%
administration in a very strict way
Need to appoint a tax representative 77 37.2%
Need to register in the country 52 25.1%
No refund procedures are particularly difficult 21 10.1%
Other (please specify) 30 14.5%
Total 859
20
votes, the average here is almost 2 votes per respondent.
21

104. This time, it is interesting to note that only a few respondents (21 votes, 10.1%) considered
that no refund procedures are particularly difficult.
105. Many businesses (64.3%) cited that “actual repayments were made with long delays” as the
principal cause of difficulty. Shortly behind, with business selections from 49.3% to 58.5%,
we find “communication-related” issues (i.e. actual communication, forms & procedures,
guidance) and the fact that procedures are still paper-based (55.6%).
Highlight 14
Key factors determined by businesses to assess the ease or difficulty of a foreign VAT refund
procedure seem to be:
 Communication with the authorities, including guidance, forms and procedures; and
 Speed of repayment.
106. According to Figure 14, very few businesses Figure 14: Do you feel Government are more flexible
feel that foreign tax authorities are more when they know you?
3
flexible with them once they know them: only (1.3%)
22
9.7% (in green) think so versus 27.8% (in red) (9.7%)
who think the opposite. 63 Yes

(27.8%)
No
62
107. This is to be balanced by the fact that a third (27.3%) It depends on the Country
of businesses (33.9% – in blue) consider that it
Don't Know
depends on the country and that over a 77 Other
quarter (27.3% – in grey) simply do not know. (33.9%)
5.2. Management of Refund Claims by Businesses
108. According to Figure 15, most businesses are familiar with foreign VAT procedures, as the
vast majority of them (84.1% – 191 out of 227 – the whole pie chart excluding the blue and
grey segments) are engaged in such procedures at least once a year.
Figure 15: How often is Your Business engaged with foreign VAT refund procedures?
15
21 (6.6%)
(9.3%)
Once a Year
83
25 (36.6%) Several Times a Year
(11.0%)
Once a Month
Once a Quarter
27
(11.9%) Less than Once a Year
56 Don't Know
©OECD 2010 (24.7%) Page 37 of 44
109. Table 9 shows that 25.1% of the respondents (in green) systematically manage their claims
internally. On the other hand, at least 56.4% of the respondents (in red and pink) fully or
partially outsource the management of refund claims (including to another associated
entity), including nearly a quarter (24.7% – in red) who systematically resort to outsourcing.
Table 9
Generally, who makes the claims for your refunds of foreign VAT? (227 responses)
Option Number In %
of votes
Someone within Your Business 57 25.1%
Someone outside Your Business (including another entity of your 56 24.7%
company/group)
Combination of the above 72 31.7%
It depends on the countries 27 11.9%
I don’t know 15 6.6%
Total 227 100%
110. The main reasons invoked for outsourcing are summarised in Table 10 below. The clear
winner, with nearly 62% of businesses vote, is “knowledge of local languages”. Cost
efficiency, success rate and peace of mind also emerge as strong reasons for outsourcing.
Table 10
22
Why are all or part of refund claims done outside of Your Business? (159 responses – multiple choice)
Option Number In %
They have better understanding of local languages 98 61.6%
It is more cost effective 63 39.6%
It is easier for us not to worry about this 59 37.1%
They are more successful at it 53 33.3%
It is just not worth doing in house 45 28.3%
It is legally required 19 11.9%
We have always done it that way 17 10.7%
Other 15 9.4%
Total 369
Highlight 15
Local language and cost efficiency are the main factors that drive at least 56.4% of businesses to fully
or partially outsource the management of their foreign VAT refund claims.
22

5.3. Are There Countries where Your Business Has Stopped Claiming Foreign VAT?
111. Exactly half the businesses that responded have stopped claiming VAT in some countries.
Table 11 below shows that the top 2 reasons are: “the amounts incurred are not worth the
trouble” and “the administration is too difficult”.
Table 11
23
Why have you stopped claiming VAT in certain countries? (106 responses – multiple choice)
Option Number In %
The amounts incurred are not worth the trouble 76 71.7%
The administration is too difficult to handle 73 68.9%
Those countries do not offer a refund procedure 48 45.3%
Those countries do not allow businesses from your country to 37 34.9%
reclaim VAT (e.g. because of a lack of reciprocity agreement with
your country)
All previous claims from Your Business have been rejected 20 18.9%
VAT relief is provided by other means (e.g. zero-rate) 7 6.6%
Other 6 5.7%
Total 267
Highlight 16
About half of businesses have stopped claiming VAT in some countries, citing “the amounts incurred
are not worth the trouble” and/or “the administration is too difficult” as the key reasons.
5.4. Efficiency and Cost of Refund Claims

Figure 16a: Overall, what percentage of the foreign VAT
112. For the percentage of foreign VAT recovered, does Your Business actually recover?
Figure 16a shows an interestingly balanced

19
experience between businesses. Figure 16b (9%)
(overleaf) shows the same data, having excluded 49 53 More than 75%
businesses that do not know. (23.1%) (25.0%)
51%-75%
113. First of all, the 50% recovery mark splits 25%-50%
businesses into virtually equal halves: half Less than 25%

45
46
reclaim 50% or less of the foreign VAT they incur (21.2%)
(21.7%)
Don't Know
whilst the other half recover more than 50%.
23

Figure 16b: Overall, what percentage of the foreign VAT

114. At the top and bottom of the scale, the
does Your Business actually recover?
experience is also evenly spread: a quarter (exc. Don’t Know)
claim to recover more than 75% of the foreign
VAT they incur, whilst the other quarter claim
to recover less than 25%. 49 53
(25.4%) (27.5%) More than 75%
51%-75%
25%-50%
45 46
(23.3%) Less than 25%
(23.8%)
Highlight 17
Half of businesses recover 50% or less of the foreign VAT they incur and a quarter recover less than
25%.
115. Costs incurred by businesses in reclaiming foreign VAT are analysed at Figures 17a and 17b,
measured in percentages of the foreign VAT recovered. Businesses were asked to include all
costs, i.e. both internal (e.g. salaries) and external (e.g. specialist company or other
professional fees).
Figure 17a: Overall, as a percentage of the foreign VAT Figure 17b: Overall, as a percentage of the foreign VAT
recovered, what is the cost to Your Business? recovered, what is the cost to Your Business?
(exc. Don’t Know)
3 3
(1.4%) (1.6%)
30 25
(14.2%) (11.8%) 34 25
More than 50% (18.7%) (13.7%) More than 50%
26% to 50% 26% to 50%
34
(16.0%) 42 16% to 25%
(19.8%) 42 16% to 25%
6% to 15%
(23.1%)
6% to 15%
5% or Less 78
78 Don't Know (42.9%) 5% or Less
(36.8%)
116. For over half of the businesses (in dark and light green), the costs incurred to obtain refunds
are 15% or less of the amounts reclaimed. However, for more than a third (in pink and
orange), the costs are between 16% and 50% of the amounts recovered.
117. Only a very small minority (in red) estimate that their recovery costs exceed 50% of the VAT
recovered.

Highlight 18
Over half of businesses incur costs to obtain refunds that are 15% or less of the amounts recovered.
However, for more than a third of businesses, the costs are between 16% and 50% of the amounts
recovered.
118. Figure 18 shows that, according to businesses, 57.5% of foreign VAT claims take more than 6
months to be refunded (in red and orange) and half of those (26.4% of the total – in red)
take over a year.
119. Only 29.7% (from dark green to yellow) are refunded within 6 months, while a low 10.4% are
paid within 3 months.
Figure 18: How long does it generally take for Your Business to be refunded the money?
4
(1.9%)
27 18 Less than 1 Month

(12.7%) (8.5%)
More than 1 Month, but Less than 3 Months
41
(19.3%) More than 3 Months, but Less than 6 Months
56
(26.4%)
More than 6 Months, but Less than 1 Year
More than 1 Year

66
(31.1%)
Don't Know
120. The results are in line with businesses’ comments of section 5.1 which provide the reasons
for procedures being particularly easy or particularly difficult.
Highlight 19
According to businesses, tax authorities take a long time to pay, with well over half of all claims
taking 6 months or more to be refunded, and half of those taking over a year.
121. 34% of the respondents (out of 212 businesses that replied to the question) have appealed
against a denial of a refund claim by a tax administration. 89% of them have been successful
at least sometimes.

Highlight 20
When they do so, businesses seem to be successful in appealing against denied claims, as 89% of
those concerned confirm that they have been successful in at least some of their cases.
5.5. Impact of Refund Procedures on Business Decisions
122. Figure 19 shows that, around one-third of businesses (36.0% – in red, pink and yellow) give
consideration to foreign VAT implications prior to engaging in operations or transactions
with a particular jurisdiction, whereas 50.3% (in green) do not.
Figure 19: Does the potential of incurring foreign VAT Figure 20: Have you ever implemented alternative legitimate
influence your decision to do business in that means to avoid the payment of foreign VAT
country? or going through refund procedures?
13
(4.2%) 42 13 47
(13.6%) (4.2%) (15.3%)
No / Never No / Never
22 Sometimes 142 Sometimes
(7.1%) 155 35 (46.1%)
(50.3%) Often (11.4%) Often
Yes / Always Yes / Always

76
(24.7%) Not Sure 71 Not Sure
(23.1%)
123. Figure 20 reveals that nearly half of businesses (46.1% – in green) have never implemented
alternative structures to avoid incurring foreign VAT or going through refund procedures.
On the other hand, 38.7% (in red, pink and yellow) admit to having done so.
Highlight 21
In terms of doing business in a particular jurisdiction, over a third of businesses are influenced by the
potential to incur foreign VAT and nearly 40% have implemented legitimate alternatives to avoid
paying it or going through refund procedures.

6. Suggestions for the Future
124. Amongst the improvements in the refund procedure that would make the most difference,
standardisation and harmonisation are the top two for businesses, as shown in Table 12
below.
Table 12
With regard to refund procedures, which of these things might make a difference to you - what would you like
24
to see more or less? (308 responses – multiple choice)
Option Number In %
of votes (of 308
responses)
More Standardisation of procedures across countries 131 42.5%
More Harmonisation of legislation across countries 119 38.6%
More electronic filing procedures 118 38.3%
Quicker repayments from tax authorities 108 35.1%
Clearer guidance from tax authorities 72 23.4%
More standardisation of claim forms across countries 62 20.1%
Less Paper - based procedures 57 18.5%
Better communication between my business and tax authorities 56 18.2%
Less use of tax representative 40 13%
Payment of interest on late payments received from the tax authorities 29 9.4%
More flexible/extended deadline to submit the claim 25 8.1%
Ability to appeal against decisions made by tax authorities 8 2.6%
Follow up request for information 5 1.6%
Clearer time limits 3 1.0%
No preference 15 4.9%
Other 14 4.5%
Total 862
125. The main areas of difficulties for businesses to obtain refunds emerge more clearly when
comparing Tables 8 and 7 of section 5.1 with Table 12 above.
126. From Table 8, it appears that the main difficulties encountered were:
a. Communication with tax authorities is difficult/guidance is unclear (121+102=223 votes);
b. Actual repayments are made with long delays (133 votes);
c. Procedures and claim forms are specific to each country (lack of harmonisation) (117 votes); and
d. Refund procedures are still paper-based (115 votes).
24
This question allowed for multiple choice responses, so each respondent may have chosen more than one thing. With a total of 862

127. From Table 7, it appears that the main reasons that businesses find refund procedures easy were:
a. Communication with tax authorities is easy/guidance is clear (80+69=149 votes);
b. Actual repayments are made quickly (66 votes);
c. Procedures are harmonised (32 votes); and
d. Refund procedures are electronic (31 votes).
128. Related to this, when asked which things would make a difference to the claiming of
refunds, 308 respondents cited the following as the main ones (Table 12):
a. More harmonisation of legislation, procedures and claim forms across countries
(in yellow, 131+119+62=250 votes);
b. Less paper based procedures/more electronic filing procedures (in blue, 118+57=175 votes);
c. Clearer guidance from individual tax authorities on their procedures/better
communication between my business and the tax authorities (in green, 72+56=128
votes); and
d. Quicker repayments from tax authorities (in red, 108 votes).
129. From the correlation between the 3 tables, it transpires that businesses would like to see:
 Improved communication with tax administrations, including in terms of administrative
guidance (clarity of the rules), interaction with individual businesses (taxpayer service)
and actual means of communication (use of modern communication technologies);
 Harmonisation and standardisation of the rules, procedures and forms; and

 Quicker repayments from tax authorities.
Highlight 22
In order to improve the procedures, businesses would like to see:
 Improved communication with tax administrations, including in terms of administrative

guidance (clarity of the rules), interaction with individual businesses (taxpayer service) and
means of communication (use of modern communication technologies);
 Harmonisation and standardisation of the rules and procedures; and
 Quicker repayments from tax authorities.

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ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

VAT/GST RELIEF FOR

A Business and Government Survey

Prepared by the Committee on Fiscal Affairs

CENTRE FOR TAX POLICY AND ADMINISTRATION

II. Assessing the Nature and Extent of the Issues 8

III. Relief Procedures 11

IV. Results from the Government Survey 14

©OECD 2010 Page 2 of 44

V. Results from the Business Survey 19

©OECD 2010 Page 3 of 44

©OECD 2010 Page 4 of 44

©OECD 2010 Page 5 of 44

1. The OECD work on VAT/GST Guidelines

©OECD 2010 Page 6 of 44

2. Relieving VAT for Foreign Businesses

• A description of the framework and methodology applied to the surveys, as well as a

• A review of existing relief procedures (Chapter III);

©OECD 2010 Page 7 of 44

II. Assessing the Nature and Extent of the Issues

8. The data-gathering work was undertaken by means of questionnaires sent to government

9. This work was limited to:

• International issues; and

• Business-to-Business transactions. VAT refund or relief procedures for tourists and

©OECD 2010 Page 8 of 44

2. Questionnaires on Governments’ Administrative Practices

3. Questionnaires on Business Experience

4. Data from Other Sources

©OECD 2010 Page 9 of 44

©OECD 2010 Page 10 of 44

III. Relief Procedures

Examples of procedures from these two groups follow.

2. Relief Procedure in New Zealand

©OECD 2010 Page 11 of 44

3. Relief Procedure in Canada

4. Relief Procedure in Morocco

5. Relief Procedure in the European Union

©OECD 2010 Page 12 of 44

©OECD 2010 Page 13 of 44

IV. Results from the Government Survey

1. Time Limits to Submit Refunds

©OECD 2010 Page 14 of 44

43. There appears to be a lack of consistency in the application of reciprocity by different

©OECD 2010 Page 15 of 44

48. Notes for reading Table 1:

• An approximation of the number of claims received and actually refunded is obtained by

©OECD 2010 Page 16 of 44

6. Fraud and Avoidance Issues

©OECD 2010 Page 17 of 44

©OECD 2010 Page 18 of 44

V. Results from the Business Survey

©OECD 2010 Page 19 of 44

H22. In order to improve the procedures, businesses would like to see:

©OECD 2010 Page 20 of 44

2. Outline of the Summary Analysis

56. The questionnaire was organised around 3 main sections:

57. This summary analysis is organised in a similar way.

©OECD 2010 Page 21 of 44

3. Section 1: Tell Us about You and Your Business

3.1. Size and Quality of Panel/Sample

3.2. Size/Type of Business

3.3. Location of Respondents

©OECD 2010 Page 22 of 44

©OECD 2010 Page 23 of 44